WEDNESDAY, Dec. 8 (HealthDay News) -- It's the time of year for holiday parties, gift shopping and open enrollment, when many employees have to make decisions about their employer-sponsored health-care plans.
Last year's landmark health care reform legislation means changes are in store for 2011. One of the most significant: starting Jan. 1, you'll no longer be able to pay for most over-the-counter medications using a flexible spending account (FSA).
That means if you're used to paying for your allergy or heartburn medication using pre-tax dollars, you're out of luck unless your doctor writes you a prescription. (The exception is insulin, which you can still pay for using an FSA even without a prescription).
Flexible spending accounts, which are offered by some employers, enable employees to set aside money each month to pay for out-of-pocket medical costs such as co-pays and deductibles using pre-tax dollars.
"This is basically reverting back to the way FSAs were used a few years ago," said Paul Fronstin, a senior research associate at the Employee Benefit Research Institute in Washington, D.C. "It wasn't that long ago that you couldn't use FSAs for over-the-counter medicine."
Popular uses for FSAs include eyeglasses, dental and orthodontic work, as well as co-pays for prescription drugs, doctor visits and other procedures, explained Richard Jensen, lead research scientist in the department of health policy at George Washington University in Washington, D.C. Over-the-counter drugs became FSA "qualified medical expenses" in 2003, according to the Internal Revenue Service.
The way an FSA works is an employee decides before Jan. 1 (usually during the company's open enrollment period) how much money to contribute in the year ahead. The employer deducts equal installments from each paycheck throughout the year, although the total amount must be available
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